It’s Time We Start Thinking Less About Installs and More About Retention

Editor’s note: This post was originally published in May 2015 and has been updated with new content, data, and images based on big changes in the mobile landscape.

For many mobile marketers, the golden measurement of an app’s success is downloads—or more specifically, installs. After all, an app with 200k installs must be doing something right.

But is increasing customer acquisition truly the best objective for today’s mobile marketer? Perhaps not.

After analyzing thousands of leading mobile apps, we’ve found two key trends around installs that might leave you questioning your current marketing strategy.

First, installs are getting more expensive.

With over 1.4 million apps in both the Apple App Store and Google Play Store, it’s getting harder to vie for the attention of the customer.

Many marketers attempt to circumvent the app stores’ search ranking algorithm by acquiring customers using app install ads. The downside of app install ads is that the cost of acquiring a loyal mobile customer (defined here as someone who opens your mobile app at least three times) has risen significantly in the last year. With app install spending expected to grow by 80% this year according to eMarketer, the cost of acquiring a customer may even outweigh the lifetime value of that customer—rendering your ad campaign economically impractical.

Unless you have a good understanding of both customer acquisition costs (CPI) and average revenue per user (ARPU), you may be in for a big surprise with your ad spend return.

Second, installs are an artificial indicator of your app’s audience.

Your app may see thousands of new installs every day, but how do installs translate to your audience? How many of these will become active, engaged, and profitable customers of your app?

On average, only 25-40% of new customers will re-launch an app after the first week. This number diminishes as time goes on, ultimately falling to 4% one year out. Of these retained customers, only a small proportion will continue on to be active and engaged users of your app.

In other words, downloads and installs say little about the true health of your app. According to our research, only 40% of customers continue to use an app they downloaded a month ago— and this number plummets to 4% over the course of the first year in the customer journey

So what’s a better metric? Retention.

High retention rates are the holy grail for digital marketers, and app marketing is no different. Not only does retaining customers cost less than acquiring new ones, but it can also be used as a trust signal around how well your brand knows its customer base. Boosting retention is the obvious choice for any app marketer when it comes to cutting customer acquisition costs.

However, we’ve already seen that retention doesn’t look very good for the average mobile app. What many mobile marketers don’t realize is customer churn can be largely managed with a few simple improvements to their app’s customer experience, and boosting retention doesn’t mean you have to completely reinvent the mobile app marketing wheel.

Here are Apptentive’s top five strategies for boosting retention and moving the needle on your mobile revenue:

1. Launch a Voice of the Customer (VOC) Initiative

The average company never hears from 96% of its customers. For every one vocal customer complaint, studies indicate that there are 26 equally unhappy but silent customers—the vast majority of whom will simply leave your app without ever indicating why.

Before you can hope to boost retention, you need to understand why your customers leave in the first place. This takes both empowering your customers with an easy way to leave feedback in your app, and actively listening to their feedback and other social signals. Developers and marketers alike strive to create the perfect customer experience. Without actual customer insights, however, these programs often fall short. Many lack the tools and data to validate their assumptions and to test if their picture of the customer experience is truly aligned with their customers.

App store ratings and reviews provide a good starting point for a VOC initiative, yet don’t provide anywhere near the holistic picture you need to understand your customers as a whole. Apptentive recently completed our 2015 App Store Ratings and Reviews survey and found that even though 75% of respondents identified app store reviews as a key driver, only 36% had actually left a review in the past year. It’s up to us, as mobile marketers, to give a voice to the vast majority of customers not inclined to leaving reviews in the app stores.

To do so, marketers are bridging customer service and mobile—introducing in-app messaging for one-to-one communications with their mobile customers; pushing more app store ratings and reviews with intelligent prompts; and collecting customer insights at scale using in-app surveys and feedback forms. These insights allow marketers to hone in on customer pain points and requests for new features that can be used to shape future updates of the app and earn customer loyalty.

In the previous section, we added the intelligent qualifier to ratings prompts and in-app messaging. This is a slight but important distinction when it comes to customer retention and satisfaction. Many marketers believe the key to customer engagement is messaging, which all too often manifests itself in the form of an endless barrage of push notifications. However, the harsh reality is push notifications may be harming your app’s retention rates. You might be unwittingly leading customers to opt out or to even uninstall your app simply to get a break from the annoying notifications.

When it comes to retention, how you message your customers matters just as much as what you message them.

As a best practice, we’ve found the best way to engage customers is to offer them events (rating prompts, messages, surveys, etc.) at key ‘mobile moments’ throughout the customer journey. These moments are typically tied to the completion of an in-app task, such as after a customer has made a purchase or watched a video. In contrast, attempting to engage customers before or during a specific task can be seen as intrusive and leads to higher exit rates and lower response rates.

Your customer opened the app with a goal or task in mind—let them accomplish this goal before

sending them a message linking to another part of the app or distracting them from the task at

hand.

When customers are engaged in an intelligent manner, the results speak for themselves. The chart below shows average retention rates for mobile apps over time and the boost in retention that you can expect to see as a result of interacting with your customers in an intelligent, timely, and contextually relevant way.

3. Let customers know you care

The best way to retain your customers is to simply let them know they’re valued. After collecting

and analyzing your new customer insights, give thanks and acknowledge your customers’ feedback. If you see feature requests or bug reports for a certain feature, consider working it into your product roadmap. And on releasing a new update, remind your customers you’re listening and let them know the update was made possible only by their continued feedback.

At Apptentive, our focus is helping brands build customer love by showing them they care. There are four main in-app engagement strategies we suggest brands use when finding out why customers feel the way they do: offering customer surveys, prompting customers to rate the app at the right time, asking for feedback, and conducting a two-way conversation with individual customers.

In reminding customers you’re listening to their feedback and care about their thoughts, you’ll adopt and convey a customer-first mentality that will let your customers know their opinions aren’t only listened to, but highly valued.

4. Give customers a reason to come back

70% of apps are abandoned after the first week, and it often comes down to stale content. If you want customers to come back to your app day after day, provide them something new and original each time they open the app. These rich content updates can be in the form of a flash sale, a daily comic, a stream of user-generated photos, a loyalty or achievement program, or something as simple as resetting activity limits.

Whatever shape your reason to come back takes, as customers come to expect fresh content, they’ll get into a routine of regularly launching your app to see what’s new and exciting. People can only look at the same content for so long before they get bored and stop using the app with regularity, look for a similar app to fill its place, or leave the app for good.

To understand what content will provide the most value, and the best reason to return, step in to your customers’ shoes using your newfound insights. What would make you, as a customer, want to revisit the app time and time again? To help get you started, ask yourselves the following questions:

How long has it been since new content has been published in my app?

Am I currently running any business promotions? How can I incorporate them into my app?

Do I have a loyalty program? Am I offering enrolled customers unique in-app content?

Is any in-app content out-of-date? What can I do in the short-term to update it?

Am I rewarding people who open my app frequently for their time? If not, how can I do so?

5. Understand the math of the app business

Last, but certainly not least, have a way of measuring your retention marketing strategies. What are your key objectives, and what metrics make the most sense for measuring their success? If you’re not measuring your success, you’ll never know how you can improve overtime.

Common metrics include retention (and its inverse, customer churn), monthly active users, daily active users, uninstalls, loyalty, and lifetime value. Looking at each of these metrics will give you different insights into how customers are engaging with your app, and ultimately will build the framework for boosting your customer retention rate.

Calculating each of these metrics is, of course, easier said than done. It ultimately comes down to the parameters you set for each individual app or campaign: How active is an active customer? What makes a customer loyal? Does a customer who opens your app once every two months constitute as retained? Every business will be different, so make sure to assess your general business goals before setting goals for individual metrics.

Wrapping it up

Although installs used to be a strong metric to gauge an app’s success, mobile marketers now have insight into more telling data points around app performance, with retention taking the lead. The mobile marketplace is shifting, and app marketers who put their focus toward driving retention over driving installs will undoubtedly have an advantage in coming months. Putting focus on improving your in-app experience to retain customers will not only drive revenue, ratings, and reviews—it will make your customers happier and more loyal to your brand for years to come.

Have you recently shifted gears toward retention? Have any additional strategies around putting customers first? I’d love to hear your thoughts in the comments below!

Ashley Sefferman
Ashley Sefferman is Head of Content at Apptentive. A mobile marketing and content strategy enthusiast, she writes about mobile apps, loyalty, inbound marketing, and making the mobile world a better place for people. Follow Ashley on Twitter @ashseff.